Five Best Sunday Columns

Yao Yang on China's $3.2 Trillion Headache. "While the downgrade of Unites States government debt by Standard & Poor's shocked global financial markets, China has more reason to worry than most: the bulk of its $3.2tn in official foreign reserves - more than 60 per cent - is denominated in dollars, including $1.1tn in US Treasury bonds," writes Yao Yang. This is what China is up against. "So long as the US government does not default, whatever losses China may experience from the downgrade will be small. To be sure, the dollar's value will fall, imposing a balance-sheet loss on the Peoples' Bank of China (PBC, the central bank). But a falling dollar would make it cheaper for Chinese consumers and companies to buy US goods." Additionally, "The downgrade could, moreover, force the US Treasury to raise the interest rate on new bonds, in which case China would stand to gain." But the problem with the downgrade for China is timing: if it leads to a double-dip recession, there is increased chance of default. So what might China do? "Diversification away from dollar assets is the advice of the day. But this is no easy task, particularly in the short term." Yang suggests that "the government must rely on longer-term measures to mitigate the problem, including internationalisation of the renminbi. Using the renminbi to settle China's international trade accounts would help China escape the United States' beggar-thy-neighbour policy of allowing the dollar's value to fall dramatically against trade rivals."

Karl Marlante on the Meaning of Medals. "In the military I could exercise the power of being automatically respected because of the medals on my chest, not because I had done anything right at the moment to earn that respect. This is pretty nice. It's also a psychological trap that can stop one's growth and allow one to get away with just plain bad behavior.," writes novelist Karl Marlante, who went to Vietnam at the age of 23. "The best words I've ever heard on the subject of medals come from a fellow lieutenant... he said, 'A lot of people have done a lot more and gotten a lot less, and a lot of people have done a lot less and gotten a lot more.'" In terms of being a hero, what do medals really mean? Writes Marlante: "I got my medals, in part, because I did brave acts, but also, in part, because the kids liked me and they spent time writing better eyewitness accounts than they would have written if they hadn't liked me...Medals are all mixed up with hierarchy, politics and even job descriptions. What is considered normal activity for an infantry grunt, and therefore not worthy of a medal, is likely to be viewed as extraordinary for someone who does the same thing but isn't a grunt, so he gets a medal and maybe an article in Stars and Stripes." Ultimately, "The only people who will ever know the value of the ribbons on their chests are the people wearing them—and even they can fool themselves, in both directions."

William Deresiewicz on the Cult of the Military. Next to the Wall Street Journal's ode to heroism in war, the New York Times has an op-ed on the cult of the military from author William Deresiewicz, whose essay is widely taught at West Point. William Deresiewicz writes: "No symbol is more sacred in American life right now than the military uniform. The cross is divisive; the flag has been put to partisan struggle. But the uniform commands nearly automatic and universal reverence." He adds that "Liberals are especially careful to make the right noises: obeisance to the uniform having become the shibboleth of patriotism, as anti-Communism used to be." This is how this came about: "The new cult of the uniform began with the call to 'support our troops' during the Iraq war. The slogan played on a justified collective desire to avoid repeating the mistake of the Vietnam era, when hatred of the conflict spilled over into hostility toward the people who were fighting it. Now the logic was inverted: supporting the troops, we were given to understand, meant that you had to support the war... This helps explain why the souring of the wars failed to tarnish the military’s reputation." But despite the fact that "there is no question that our troops are courageous and selfless," Deresiewicz writes, doing a little lip-service himself, we should still be able to question the military on the lack of success in Iraq and Afghanistan, and ask if "the military really ceased to be the big, bumbling bureaucracy it was always taken to be?" Not to mention: "the abuses at Abu Ghraib; the premeditated gang rape of a 14-year-old girl in Mahmudiya, Iraq, and the murder of her family; the executions of Afghan civilians by the self-described “kill team” from the 5th Stryker Brigade. Only the first has been widely discussed, likely because there were pictures. How many more of these have there been? Maybe none, maybe a significant number: until we ask — until we want to ask — we’ll never know."

Frank Bruni on the Candidates Fake Acts of Selflessness. "While investment bankers can unashamedly cop to greed, thespians to vanity and claims adjusters to the validation of a promotion, politicians feel compelled to perform an elaborate pantomime of unalloyed altruism, asserting that self-interest and self-satisfaction are nowhere in the equation of their ambitions," writes Frank Bruni. Don't buy it. And few people do: "If people bought that, Congress’s approval rating wouldn’t have dipped last week to what I’m pretty sure are negative integers... No more talk about heeding “a call,” whether it’s from God, voters or Verizon." But this election cycle, it's more rampant than ever: "two of the most closely watched Republican presidential candidates, Rick Perry and Michele Bachmann, describe themselves as recruits and dress their quests in holy garb." It's not that they aren't patriotic, but "if anything there’s more — not less — hubris in politics, which demands public exposure and comes with microphones, crowds, clapping... For voters, the wise course is to take all the humble-servant patter for the window dressing it may well be, assume egotism and move on to an evaluation of whether a candidate’s apparent values and self-interest dovetail with our own."

Howard Davies on European Banks' Approaching Failure. "The evolution of the crisis has, however, thrown European banks' balance sheets into sharp focus. Eurozone governments have proven unwilling, or unable, to produce a solution that persuades markets that they are on top of the problem," writes Davies with regard to the current economic crisis in Europe. There are layers of problems. "The political problem is that the second solution cannot yet be sold to German voters, let alone to nationalist fringe parties such as France's National Front and Finland's True Finns." Additionally, "EU banks are holding sovereign debt that clearly is not worth 100 cents on the euro. But even the financial "stress tests" conducted by regulators did not require the banks to acknowledge that inconvenient truth." Compared to U.S. and British Banks, many eurozone banks have made far less progress in strengthening their capital adequacy and liquidity since the financial crisis erupted. The onus now falls on Germany to put aside it's political objections. "The Germans have now almost run out of alternatives. If they do not do the right thing soon, there will be some banking casualties, and European governments will once again be obliged to put in public money. That will be just as unpopular as bailing out the Greeks, and probably much more expensive."